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Anglo African surges as TLP-103C well strikes oil at Djeno reservoir

The oil & gas developer said the 2,683m well had intersected the Djeno horizon, with wireline logging confirming a 12-metre oil column
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The new column takes the total payzones encountered by the TLP-103C well to 56m

Shares in Anglo African Oil & Gas PLC (LON:AAOG) gushed higher in mid-afternoon trading Tuesday after its TLP-103C well struck hydrocarbons at its Tilapia licence in the Republic of the Congo.

The oil & gas developer said the 2,683m well had intersected the Djeno horizon at the site, with wireline logging confirming a 12-metre oil column with a further 4m transition zone from 2,396m to 2,411m in a dolomitic interval with a high content of shale.

WATCH: Anglo African O&G's David Sefton updates on drilling & 'game-changing' Mengo reservoir

AAOG added that there were also several smaller potentially oil-bearing intervals, but these had been difficult to precisely identify due to mud build up on the calliper.

The new column takes the total aggregate payzones encountered by the TLP-103C well to 56m, including a 26m oil column from the Mengo reservoir, aggregate 13m across oil column between the R3 and Mengo reservoirs, and a 5m oil column at the R2 reservoir.

The data from the well would allow the company to optimise the location of the planned TLP-104 well in order to produce from the Djeno reservoir at “optimal levels”.

The firm added that it was “confident” there was another Djeno reservoir below the current drilled depth and that it intended to test this secondary reservoir target with the TLP-104 well as for safety reasons, it had decided not to drill further with the current equipment.

Accordingly, AAOG said it would commission a new rig to drill the TLP-104 well.

The company also said following the end of the recently drilled well, the Director General (Hydrocarbons) of the Republic of the Congo had confirmed the government intended to award the firm a new licence over the Tilapia field that will extend to 2042.

David Sefton, executive chairman of Anglo African, said the latest results meant the company had now “encountered oil in all the targeted horizons” at the project, adding that they would now aim to bring the TLP-103C well into production and thereby increase production and cashflow at the licence.

Sefton also said that following the indications from the government, the company now intended to plan a “full field development” at Tilapia.

In a note to clients, analysts at City broker finnCap upped their target price for AAOG to 52p from 32p to reflect the de-risking of the Mengo and Djeno reservoirs as well as raising their chance of success assumptions for Mengo to 80% from 60% and to 50% from 25% for Djeno.

Shares were up 31% at 12.4p.

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